Defaulting On a Loan – The Dumps

Default, in the finance industry, happens when a debtor has not met their obligation according to a debt contract. This will occur when the debtor is either unwilling to pay their loan or they are not able to pay their loan.

When you default on a loan, it means you’re neglecting your financial responsibility. We are all aware of the reasons why someone would not be able to pay their loan. People lose their jobs or a sudden medical emergency may happen but whatever the reason may be, you should always communicate with your lender. Most lenders will work with you especially if your financial hardship is temporary.

Most of us have occasional late payments but when it evolves from a late payment to a missed payment to no payments, the debtor will suffer the consequences. The first thing that happens when you default on a loan is the organization will begin to contact you to get their money. It will start with friendly reminder calls or correspondence but as the default continues, they become more aggressive and the contact is more frequent.

Eventually your account will be turned over to a collection agency. This kind of action will begin to affect your credit. When this happens, it will be harder for the debtor to get other loans, it will increase your interest rates and sometimes may even affect your ability to get a job. It can even result in a repossession or foreclosure depending on the type of loan.

If you simply don’t have the money to pay, it still is best to be proactive. When you approach the situation in this manner, the lenders will peg you as a delinquent with no intention to pay and take their actions accordingly. If you are genuine and want to make the effort, then contacting your lender to create an easier payment schedule is more likely to happen or even having the interest rates reduced.

If you have already ignored the situation, it is never too late. Your credit will most likely already be damaged but the negotiation process is never off the table and there may still be a chance for damage repair.

Putting yourself in this situation can and will only lead you into a world of madness. You will be consumed by the stress of your finances, frustrated by the constant aggressive contact and the feeling of depression will arise and will only deepen. Take care of you and your financial health!

For more valuable information, please visit www.prudentcreditrepair.ca

What Should Your Credit Score Be?

Most of us depend on credit for many things such as buying a car, house or getting a loan. Your credit report is your credit history wrapped up in three digits. It measures your ability to make payments on time and is designed to help lenders determine your credit worthiness.

Credit scores in Canada can range from 300-900. The higher your score, the healthier your financial record is and lenders will view you as less of a risk to them. The interest rates you receive will be determined by your score. Maintaining a good credit score is essential to your financial well being.

What is a good credit score?

You are considered to have good credit if you have a number of 700 and up on your credit scale. This score will allow you to have fewer problems applying for loans and getting better interest rates.

You are in the okay range if your credit score is between 450 and 650. You may be viewed as a risk but one that is acceptable to most organizations depending where you fall between these 2 numbers. The closer you are to 650, the better.

Anything under 450 is considered bad credit. You will be looked at as a high risk to the lenders. You will have significant trouble acquiring loans. Nowadays, there are plenty of places that will approve you for a loan but the downfall is that your interest rates will be sky high.

There are other factors that contribute to your credit score. The major factors contributing to your score is made up of the amounts that you owe and your payment history. The lesser factors are the type of credit you are using, the percentage that is new debt and the length of your credit history. These are all factors that are considered when determining your credit score.

You have a right to see your credit report. No one can have access to your report unless you allow it. Remember that every time you apply for a loan or credit card, you are allowing the company to check your credit report.

Knowing your actual credit score is a great start. You should understand the key factors that affect your score and learning how to increase and/or maintain your score over time is also important.

For more valuable tips and information please visit www.prudentcreditrepair.ca

Smart Things to Spend Your Tax Return On

With many people anxiously awaiting their refund from the Canada Revenue Agency, now is a great time to think about how you can spend that tax return. The biggest mistake one can make is to look at the refund as free money. A tax refund is NOT free money, it’s YOUR money! When you view your refund as something other than a paycheque, you’re more likely to spend it on treating yourself. Of course, there’s nothing wrong with treating yourself but here are just a few smart ways of spending your tax refund.

Credit Card Debt – If you’re getting collector calls then you know that ignoring them won’t make them go away. Use your refund to take care of those late payments. If you’re current on your bills, why not bring down or pay off your credit card debt balance. This way you have the chance to increase your credit score and be free of interest accumulating.

Mortgage – If you have a mortgage loan every extra payment you make reduces the length of your loan and the amount you pay in interest. Every extra payment will allow you to pay more in principal and less in interest in the long run.

Auto – If you have a car loan, this is a great opportunity to make an extra payment. If you are planning on selling your car, then use your refund or part of your refund to get your car detailed. Getting your car detailed can make a huge difference when you’re putting your car up for sale. You can also use the money to service your car properly. Many just put off servicing their car so this is a good time to get that oil change you’ve been putting off, check your tires and get that long awaiting tune-up. A well maintained vehicle with properly inflated tires burns less gas and saves you money in the long run.

You – Hopefully your tax refund is enough to cover one of the above and give yourself a little treatment but remember there’s always a balance. They key is to take care of your responsibilities first and then enjoy your money. If you and your family have been stressed because of daily life chores and haven’t had the time or money to enjoy a nice family meal at a restaurant then now is a good time for that. Buy tickets to a show or enjoy a day at the spa with your child. Buy yourself that one good suit you’ve always needed.

There are so many things you can do with your tax refund, you just gotta take care of your obligations first. For more valuable information and tips, please visit www.prudentcreditrepair.ca

Credit Cards – When You Should Reduce Your Credit Limit

When you apply for a credit card, a credit limit is determined by your creditor. This is evaluated on how risky they think it is to lend to you. Your income and your credit score are two major factors in determining your limit. You can increase your limit by calling into your institution and asking for the increase and the same goes for reducing your limit but at what point do you reduce your credit limit?

If you’re a compulsive shopper, it’s extremely beneficial for you to reduce your credit limit. If you are likely to continue to spend excessively then reducing your limit on your credit card will limit the damage you can cause to your finances. Reducing your credit limit is a great way to manage your spending but it also leaves you with no available credit should you need it in case of emergency so you should remember to be diligent. The focus should be on your outstanding debt and not on your available credit so it’s necessary to have a low credit limit and make all your monthly payments on time.

Credit card companies are very aware of how human psychology plays into our spending behaviour. Credit card companies make money when you are in debt so if you find that they are increasing your credit limit even after you have decreased the limit, don’t be fooled as this is a ploy to keep you in debt and having you pay as much interest as possible.

Does reducing my credit card limit hurt my credit score?

When you reduce your credit limit, this changes your credit utilization ratio which is the percentage of your credit limit that you’ve actually used so if your balance on your credit card is $300 and your credit limit is $1000 then your credit utilization ratio is 30%. This means that if your balance is $300 and you reduce your limit to $500 then your utilization ratio will jump and this will likely hurt your credit score. If you are responsible with your debt then it is wise to keep a high credit limit. If you spend money on a credit card because you have a high credit limit then you can help your credit score by reducing your credit limit. When your credit limit is low then your debt is more manageable. Missed payments and accounts in collection status can actually do more damage than a high utilization ratio.

Personal impulse is dangerous so if you don’t have the discipline then cut up those cards and close those accounts. For more valuable information and tips, visit http://www.prudentcreditrepair.ca

I Can’t Afford To Pay My Tax Debt

After you file your tax return, you will be sent an assessment notice from the Canada Revenue Agency (CRA) which shows the balance of the tax owing. If it is in a refund balance, this is money that the CRA owes to you but if it shows a balance owing then you must pay the CRA those monies by the payment deadline. After the payment deadline if the balance is not paid, interest will accrue and will be compounded daily.

What if I can’t afford to pay the balance owing to the CRA?
If you are already neck deep in debt and can’t afford to pay off the balance owing with the CRA, you have options:

Negotiate a payment plan with the CRA – You can contact your nearest CRA office and explain your circumstance and offer them a payment schedule that you can manage. So for example, if you have a balance owing of $1200, offer them $100 for the next 12 months. The CRA is aggressive and will always try to get you to pay the balance of in full but if they do accept the repayment plan, they will continue to charge you interest and penalty until the debt is paid off. If the CRA doesn’t accept the offer, they will take further action against you to try and collect the money owing.

Get a personal loan – These loans have become the premiere loan choice during a temporary financial problem. It is one of the quickest ways to pay off your debt. The interest rates will likely be less than what the CRA rates are and if you choose the proper financial institution to borrow from, they will even help you rebuild your credit rating through regularly reporting all payments.

In order to avoid this problem in the future, you must determine why you owe the money, whether it’s due to cashing out RRSPs, if you’re self employed or just not contributing enough from each paycheque. In either situation, you must acknowledge where the problem is and find a solution so that you don’t find yourself in this situation again where you have to pay a lump sum at the end of tax season when you really can’t afford to. There is nothing more frustrating than working hard to maintain your daily finances only to get slapped with another debt.

For more information about personal loans to pay off your tax debt, visit www.prudentcreditrepair.ca

Can Reward Credit Cards Affect Your Credit?

Reward credit cards allow you to collect points or miles towards purchasing flights, hotels, rental cars, merchandise and other free stuff. Usually you’ll have to collect enough points in order to buy your desired freebie. Not all reward programs are created equal and every points system is different in the way it works.


It’s hard to turn down free rewards. This is how credit card companies entice people to sign up to use their credit cards. It’s important to remember that these companies are in the business to make money and they’re not offering these rewards with the possibility that they’ll lose money. These reward cards are beneficial to you if you pay back the balance in full each and every month otherwise you’ll be paying for the reward yourself in interest and annual fees.


How can a reward credit card affect my credit rating?


For many people, it’s easy to get sucked in through the tempting sign up bonus offers or immediate discount on your purchase. What starts happening here is that you can get caught up in the hopes of getting further discounts and you focus on accumulating those points that you fail to see that your debts are piling up. The more cards you have, the harder it is to keep track and all the while your credit rating is being tarnished.


Every time you sign up for a card, the lender requests a credit score and an inquiry is placed on your credit report. If you have too many requests for credit, your behaviour will be associated with those who have a higher chance for default. Even if you don’t use your credit cards, the available amount of credit you have can harm your credit score.


Reward credit cards can save you money but you have to be extremely knowledgeable on how these cards should be used so keep things in perspective.


When people spend with credit, they tend to overspend so if you find yourself in that position, stop putting things on your credit card immediately until you have your card paid off. Once this, limit your cards to 1 or 2 and then you can reconsider using them for rewards as long as you are able to pay off the balance IN FULL every month.


For more valuable information and tips on how to manage money, visit www.prudentcreditrepair.ca

How To Have A Successful Yard Sale for Extra Money

Times are tough and we can all use a little extra cash in our wallets. How do we do this? Well Spring has sprung and a great way to put extra money in your wallet is through a yard sale. There is a lot of thought and work that goes into a yard sale to make it successful so follow these tips and you’re sure to have a heavier pocket at the end of the day.

What is my first step?

The best initial step is always to choose a date. A great target date is in 2 to 3weeks time. This will give you the opportunity to get things organized and ready. When you have a yard sale the first thing you need to have is stuff to sell. So a good plan of attack is to start with a spring cleaning. Every item you come across for the sale should go to a designated area. Once your items are chosen, it’s time to organize and clean them. Remember that a clean item will net more money than a dusty one.

How do I price my items?

A successful yard sale should have items that are already price tagged, so people don’t have to pick you out of a crowd or wait around to get a price quoted over and over again. Always price your items at yard sale prices. People shop at yard sales to get a bargain, so a $20 item selling for half the price may still be sitting on the table at the end of the day. Sell that item for $5 and watch it fly off the table. If you have a ton of small items, consider having a bin or table with a sign that says something to the effect of ``Every item in this bin is $1``. Also keep in mind when pricing that people will want to negotiate some of the bigger priced items so leave room for this. These are things you no longer want and if you feel you can`t price the item at yard sale prices then you may want to save that item to sell through a different avenue.

How do I attract people to my yard sale?

The best way to attract customers to your yard sale is of course if through advertising. Place online ads on sites like Kijiji and Craigslist. Call your local newspaper and buy an ad that will appear in the paper a week before your sale. All ads should contain the date of the sale, the location of the sale, the hours and you can even include a short summary of items for sale. On the day of your sale, place signs around your area advertising your sale info. When you`re making your signs, use bright coloured paper and put your information in large legible writing. It`s also a good idea to put arrows on your sign directing them in the right direction of the sale. Don`t forget to take down the signs when your sale is over.

Anything else I need?

Yes, you will need to have newspaper or bubble wrap to wrap delicate items, have grocery bags on hand so people can carry their stuff. Don`t forget to have a lot of small change. People will buy a $2 item with a $20 bill. You can start collecting your $5s, $1s and change weeks prior or take a trip to the bank and change a $50 bill to smaller increments. Keep your money safe. Wear a fanny pack so you`re not leaving your earnings unattended. Also remember to display all your items and dedicate the day to working your yard sale.

Have a successful day and for more valuable tips and information, visit www.facebook.com/prudentfinancial